- How Can Business Influence the Energy Industry?
- Are Governments Creating the Right Policy Environments to Support Innovation?
- Can Energy Consumers Change Their Habits?
- Who is leading energy innovation?
- Will technology and engineering solve the energy crisis?
- Who should be funding energy innovation?
- Which Renewable Energy Sources are Most Promising?
- Will Energy Supply Meet Consumption in 2050?
NRDC's Environmental Entrepreneurs (E2) program
Judith Albert is the Executive Director of Environmental Entrepreneurs (E2), a national organization of business leaders who provide a non-partisan business perspective on environmental issues and promote policy that's good for the economy and the environment. www.e2.org
Ms. Albert joined E2 in 2010, after an extensive career in financial services, most recently as a senior executive in investment banking at Bear, Stearns & Co., and prior to that as an investment banker to Latin American clients at J.P.Morgan and Violy Byorum & Partners. She practiced corporate law with the firm of Paul Weiss Rifkind Wharton & Garrison, and has extensive experience in emerging markets.
Ms. Albert is a graduate of Harvard Law School and Yale College.
Why has business been slow to recognize that energy efficiency is a market?
We're talking about energy efficient appliances and vehicles. We're talking about energy efficient buildings. We're talking about businesses providing or demanding through their purchasing power goods and services designed to be energy efficient.
Consider the case of fleet owners. Fuel is one of their biggest expenses, and fluctuations in fuel prices are one of their biggest operating risks. They need fuel efficient vehicles, and some number of them banded together to lobby for higher heavy vehicle emission standards.
The fleet owners' energy problem is being solved not by the energy industry, but by the automotive industry. The net effect... less fuel consumption.
Consider the case of appliance manufacturers. No one buys a TV based on its energy consumption, and today's flat screens are the Humvees of the appliance world. But everyone looks at the Energy Star ratings on refrigerators and dryers. Appliance manufacturers just signed up for the seventh increase in refrigerator efficiency standards, because they can introduce yet further improvements and make money doing it. The net effect... less electricity consumption.
What's this got to do with the energy industry? Everything. Energy efficiency is the low hanging fruit. It is less expensive than any other power source. Energy prices respond to changes in supply and demand; if demand goes down, or growth is moderated, prices should be lower for all. That's good for business, since the savings flow back into the economy... dinners out, remodeling homes, buying appliances, building plants.
A concerted push for energy efficiency might even convince utilities and the energy industry that they're not selling a product measured in kilowatts or gallons they're delivering a service in the form of reliable energy.
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Albert H. Teich
American Association for the Advancement of Science
Albert H. Teich is the recently retired director of Science & Policy Programs at the American Association for the Advancement of Science (AAAS), a position he held since 1990. He was responsible for the Association's activities in science and technology policy and served as a key spokesman on science policy issues. Dr. Teich also serves as director of the AAAS Archives. Dr. Teich received a B.S. degree in physics and a Ph.D. in political science, both from M.I.T.
Prior to joining the AAAS staff in 1980, he held positions at George Washington University, the State University of New York, and Syracuse University. He is the author of numerous articles and editor of several books, including Technology and the Future, a widely used textbook on technology and society, the eleventh edition of which was published by Wadsworth Cengage Learning in 2008.
The answer is not straightforward. The United States has long been politically schizophrenic about the federal government's role in innovation. At one level the left and the right generally agree on the importance of government support for science, engineering, and mathematics education and fundamental research (although even there the two sides often differ on how much to spend on such programs). Where liberals and conservatives part ways, however, is at the point where policies begin to involve applied research and development and, especially, federal support of programs promoting commercialization of new industrial products and processes. This is evident in the tug-of-war over policies aimed at promoting alternative energy sources, although the reasons are perhaps more complex in that area than in some others because of the powerful lobbies associated with existing energy sources.
Political disputes over federal efforts to promote technological innovation through direct support of industrial research go back to at least the 1920s. During the past two decades, one focus of controversy has been the Technology Innovation Program in the Commerce Department intended to support high-risk, high-reward R&D in areas of critical national need. Republican presidents and congressional leaders have sought to kill this program at every opportunity, while Democrats have stood fast in its defense. R&D programs in alternative energy have been subject to the same up and down pattern at least since the oil crisis of the early 1970s awoke Americans to the need to diversify energy sources and led the federal government to initiate ambitious programs in solar, wind, and biomass energy. Other countries (and many U.S. states) have been less reluctant to involve government in support of industrial innovation. France's innovation agency, OSEO, a public company, funds research in industry and invests in small and medium enterprises. Finland's Tekes supports the development of new products, processes and services for international markets and promotes connections between researchers and industrial firms. Singapore's A*STAR is transforming the research enterprise of that nation at all levels. And the Chinese government has invested heavily in solar and wind technologies, investments that have paid off in its global dominance in these industries.
These nations and many others have produced science, technology, and innovation plans, something the U.S., with its decentralized science and technology structure, has never really been able to do. Still, for a nation to be truly innovative it needs more than a favorable policy environment. It also requires a social environment that, in the words of innovation consultant John Kao, "encourages diversity, experimentation, risk-taking, and combining skills from many fields" into what Kao calls "recombinant mash-ups" such as the iPhone. Other nations, not burdened by America's political schizophrenia over government innovation policies, are forging ahead of the U.S. in funding for research, support for science and engineering education, and other factors that underlie innovation. But the U.S. culture is unique. The question facing the United States is whether its culture and its social environment will be sufficient to offset the advantages of the policy initiatives undertaken by these other nations.
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Alliance to Save Energy
Kateri Callahan has been the president of the Alliance to Save Energy since election to the post by the Board of Directors in January 2004. She serves as the principal spokesperson for the Alliance in promoting energy efficiency worldwide as our most abundant, cost-effective and cleanest energy resource.
Under Kateri's leadership, the Alliance was influential in the passage of both the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007, the latter of which is the most significant energy efficiency legislation to be enacted by the Congress in decades. Kateri participated directly in advocacy of both bills, having testified on numerous occasions before the Senate Energy and Natural Resources Committee, the House Energy and Commerce Committee, the Senate Finance Committee and the House Science Committee.
Kateri also has overseen the Alliance's success in turning around the systemic erosion in federal funding for Department of Energy efficiency programs that began in the early years of the decade. Fiscal years 2007 and 2008 witnessed the first modest increases in funding for these programs since at least 2002.
Consumers absolutely can change their habits to use less energy, and they already are. Public awareness of ENERGY STAR the government's program identifying the most energy-efficient products grew from about 40% in 2000 to more than 75% in 2009*, while the number of retailers carrying those products went from 550 to more than 1,500.
ENERGY STAR product categories expanded from 33 to more than 60; sales increased from 600 million to three billion; and in 2009 alone, consumers and businesses saved a whopping $17 billion on energy costs!
An added plus: Consumers can enjoy the benefits of energy efficiency without giving up comfort or convenience. Making a home more energy-efficient makes it more comfortable; and smart driving habits plus proper vehicle maintenance cuts fuel costs and extends vehicle life.
The Alliance to Save Energy has calculated that American households will spend about $2,175 this year on home energy costs and about $3,325 to power their vehicles. Energy efficiency can shave 20 percent or more off home energy bills and cut annual gasoline expenses by hundreds of dollars. That money can be saved or spent on things that enhance life.
The government also makes it easy for consumers by setting minimum standards for products such as light bulbs, central air conditioners, refrigerators and home electronics. Building code adoption and implementation is a public-private process. Standards facilitate consumer purchasing by taking energy-wasting products off the market; groups like the Alliance help by educating consumers about energy efficiency.
Beyond the savings, standards and codes help create a cleaner environment and reduced dependence on energy imports.
In short, consumers + government + advocacy groups the public and private sectors working together help consumers say "Yes!" to energy efficiency and in doing so, they put money back into pockets and help the environment. A win-win-win.
*From the latest (2009) ENERGY STAR annual report
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Technology Transition Corporation (TTC)
Jeff was the founding President of the National Hydrogen Association (NHA). He continues to serve as and the President of the Hydrogen Education Foundation (HEF), General Manager of the Partnership for Advancing the Transition to Hydrogen (PATH) and Senior Advisor to the Biomass Thermal Energy Council (BTEC).
Jeff served as the founding Executive Director of the Fuel Cell Commercialization Group, the Utility Biomass Energy Commercialization Association and the Utility PhotoVoltaic Group (now the Solar Electric Power Association). He also served as the Executive Director of the U.S. Advanced Ceramics Association.
In addition to establishing and managing coalitions to develop markets for new energy technologies and products, Jeff has experience in power system management and consulting in the new technologies of electric energy service, public policy and utility regulation.
Jeff was named to the U.S. Department of Energy and U.S. Department of Agriculture Biomass R&D Technical Advisory Committee (2006-08) and has served since 2006 as the Chairman of the Pacific Northwest National Laboratory's Energy Conversion Initiative Advisory Committee.
Jeff holds B.S. and M.E. degrees in Electrical Engineering from Cornell University, Ithaca, New York.
The notion of singling out one or a few key energy innovators is attractive, and would spark debate, for sure. But there is simply no single entity or individual creating the energy innovation that we need today. There are several groups that are leading, though and I come back to them in a moment, after dismissing the institution most capable of creating change in the States the U.S. government.
Government policies and regulations are critically important for setting the stage for investments in technologies, energy services and energy resources. They create the playing field on which energy decisions are made. Yet, national government policies are seldom consistent enough over a long term to have long term impacts, with the exception of fossil fuel policies put in place decades ago.
Are there signs of innovative leadership in government?
- Government leadership is most evident in communities at the local level. Austin, Texas; Sacramento and San Francisco, California; where there are transportation, solar and trash initiatives come to mind. Years ago, Aachen in Germany, where the creative solar feed-in-tariff was born and implemented, started a groundswell that led Germany to be the leader today in solar energy.
- Some states are showing energy leadership. Former California Governor Schwarzenegger spawned the building of hydrogen fueling stations, an aggressive, comprehensive step to move the State away from oil imports and transportation-cause air pollution. States with net metering tariffs and Renewable Portfolio Standards are innovating. California, New Jersey and other states have created strong solar initiatives and other renewable energy programs.
- National governments are seldom the leaders, unfortunately but there is one that stands out China. China is leaping forward with massive investments in clean energy technologies including renewables and advanced coal options.
So where is the energy innovation that will lead us from today's energy resource and consumption patterns to tomorrow's less carbon and energy intensive future? It is coming from all levels of business, institutional and consumer activity:
- Entrepreneurs that invent and create businesses before markets develop, making significant sacrifices and taking personal risks.
- Small businesses nimble enough to articulate the market opportunity and attract capital, from personal credit cards, VCs and investment bankers.
- Large energy companies like Shell that have the resources to address energy issues in a big way and have broken away from some of their industry peers to pursue carbon reduction and hydrogen energy opportunities, among others.
- Energy policy spokespeople that see the big picture and try to get others to look holistically at energy, like Jeremy Rifkin. If we only listened to him more.
- Early adopters, whether in business or consumer settings, create the initial market pull, with the first purchasers of gasoline-electric hybrid vehicles being a prime example. Who would have thought 15 years ago that we would be driving electric drive vehicles today?
So, leadership in energy innovation can come from all of us. And it needs to. And we must also lead our political systems to change with us.
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Thomas R. Casten
Recycled Energy Development LLC
Tom has spent 30 years forming and leading organizations that develop local generation plants that recycle otherwise wasted energy to profitably lower carbon dioxide emissions. He is a vision-driven serial entrepreneur whose organizations have been responsible for over $2 billion of alternate energy projects that avoid roughly 5 million tons of CO2 per year and save roughly $50 per ton of avoided carbon.
Tom formed and chairs Recycled Energy Development LLC. He also founded and led Primary Energy Ventures (PEV) and related public company Primary Energy Recycling Corp, and Trigen Energy Corp, all of which focus on projects that recycle streams of waste energy.
Tom has received the Norman R. Taylor Award for distinguished achievement and contributions to the industry and has been named a "CHP Champion" by the U.S. Combined Heat and Power Association. He was the co-founder and Chairman of the World Alliance for Distributed Energy.
Tom was an engineer officer in the U.S. Marine Corps. He is a Magna Cum Laude graduate of the University of Colorado, with a B.A. in Economics, and was valedictorian of his 1969 graduating class of Columbia University's M.B.A. program.
In my opinion, it is highly unlikely that technology and ingenuity will solve the energy crises before Gaia suffers irreparable loss.Consider compounding trends. Over 150 years, global human raw energy consumption has doubled every 27 years, is now 43 times 1860 energy use. Raw energy use growth rates since 2000 double every 32 years.
Can technology double oil, natural gas and coal production by 2043?
To supply energy growth with non-fossil energy requires a twelvefold increase of hydro, nuclear and renewable energy 50 years. Can we increase hydroelectric production by 12 times?
Standards of living depend on access to useful energy services, and world average conversion is less than 8%. Proven and profitable technology can achieve 25% conversion efficiency, which would double access to energy services while reducing raw energy use. Technology applied this way would solve the energy crises. So why not?
Technology deployment depends on market signals, which depend on policies. One hundred year-old monopoly protection, 40-year-old environmental laws and universal reluctance to tax the hidden costs of energy all corrupt market signals. The results are grim.
The U.S. electric system delivered 33% of the input energy as electricity to consumer in 1960 and in 2010. Fifty years of incredible technological progress, zero efficiency gain. Nine presidents entered the White House pledging to reduce U.S. dependency on foreign oil, and all nine have left office with oil imports up.
What do YOU think should be done for an energy policy?
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Carbon War Room
A renowned visionary, Jigar Shah is committed to renewable energy and sustainable solutions that enable prosperity beyond the carbon economy. As CEO of the Carbon War Room, Jigar is dedicated to indentifying business-as-usual practices and replacing them with low-carbon solutions. Prior to the Carbon War Room, Jigar founded SunEdison in 2003. Under his leadership, SunEdison revolutionized the solar industry by introducing a business model to sell solar as a service. The transformation to solar power service agreements is responsible for turning solar services into a multi-billion dollar industry.
Jigar is also an expert on energy project finance, changing energy policy, working with entrenched stakeholders and convincing individuals to embrace energy technology. He works closely with entrepreneurs, policymakers and investors around the world to develop, incubate, and implement sustainable solutions.
Jigar holds a B.S. in Mechanical Engineering from the University of Illinois, Champaign-Urbana, and an M.B.A. from the University of Maryland. Jigar sits on the boards of the Prometheus Institute for Sustainable Development, SB NOW and Greenpeace USA.
Contrary to popular messaging in the renewable energy world, innovation has not been the bottleneck to growth. Rather, it is the lack of profitable deployments of existing technologies that eliminate energy waste and increase the flexibility of our energy sector. We need to immediately shift capital towards these solutions and the focus should be on pension funds and long-term growth investors with a 20-40 year horizon. Roughly 1% of private capital, $550 billion, is needed to keep us on track to reduce 17 gigatons by 2020. Investing in technology that is present in the marketplace today is profitable and much lower than junk bonds that are currently in fashion. Overcoming real market barriers to deploy energy innovations starts with the finance sector by creating a suite of financial products necessary to achieve this 1% shift in investment. While renewable energy has broken through with almost $200 billion in investment per year, we need to expand into energy efficiency and advanced technologies for shipping, built environment, agriculture, industrial, deforestation and other areas.
We must begin to work with capital sources and entrepreneurs to scale cost effective, existing solutions under current policy frameworks. Until then, existing innovations are sitting at a stoplight. Over 50% of carbon emissions can be profitably reduced today, using existing technology under the current market framework. If we ask pension funds, high net worth individuals, sovereign funds and retail money holders what financial products they want to buy, and then collect the data necessary to provide them comfort, they will shift their money to lower risk, clean climate solutions.
In a time of shrinking budgets, we can expand our creativity to discover that energy innovations are ready to be implemented at scale. The top 300 pension funds in the world collectively hold over $6 trillion in assets. It is time for them to start seeing the long-term potential of energy innovation.
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Sheeraz Haji is CEO of the Cleantech Group, a trusted provider of market intelligence on innovation across Cleantech. The company has played an influential role in the development of the category, fostering growth through critical information products, world class research and the highest caliber industry connections. The Cleantech Group is credited with originating the term Cleantech in 2002. Today, as a global company, the Cleantech Group fills market gaps to accelerate market adoption, stimulate demand and remove barriers. With more than 8,000 investors, 6,000 companies and 3,500 professional services organizations focused on clean technology, forward-thinking organizations leverage the Cleantech Group's services and maximize opportunities by subscribing to the Cleantech Group's research.
Prior to joining Cleantech, Sheeraz spent eight years co-founding and leading GetActive (now Convio), a venture-backed software-as-a-service company providing CRM tools to nonprofits, associations and educational institutions.
He has also worked for McKinsey & Company, El Dorado Ventures, GMO and Digital Impact, and he launched his career in the Washington DC office of Environ International.
Sheeraz has a BS from Brown University and an MS from Stanford University, both degrees in Environmental Engineering.
Identifying the most promising renewable energy sources is no easy task. When covering this hot topic, the press focuses much of its attention on solar and wind two energy sources worthy of further discussion. Solar has seen tremendous growth in the past decade. The global installed capacity for solar photovoltaic (PV) has grown from a couple hundred megawatts to over 19 gigawatts over the past decade. Costs have come down considerably as the industry has matured. Wind capacity increased ten-fold over the past 10 years, and the cost of generating electricity from wind is becoming competitive with coal plants.
One would think that solar and wind are poised to quickly become dominant sources of power. Not so fast. While solar capacity is growing rapidly, solar today still represents a very small portion of our overall energy mix. Its intermittency and cost premium still give utility executives pause as they ponder future energy purchases. Similarly, wind certainly has its appeal from a cost perspective, yet its tendency to blow at night and in remote areas creates storage and transmission headaches.
So, with these drawbacks in mind, which other renewable energy source shows particular promise? Hydropower.
That's right. Hydropower. Perhaps you thought hydropower was on the decline as rivers were all dammed up and environmentalists were trying to dismantle existing big dams? Admittedly, hydropower has had its challenges, and I don't expect hydro to grow significantly in the US. However, from a global perspective, I believe small-scale hydropower (plants with installed capacity of 50 megawatts or less) represents the most promising renewable energy source that is hugely underappreciated. Allow me to explain.
Hydropower is cheap. It can supply much-needed "base load" meaning that it can provide energy at all times. In parts of the world where electricity is needed most, small hydropower capacity is plentiful. China has more than 3,800 rivers representing 540 gigawatts of exploitable hydropower resources1. Building a new small hydropower plant comes with limited technology risk. Finally, the economics of hydro are attractive and predictable.
So, what's the catch? Well, there are definitely some important environmental challenges with hydro. But the same holds true for solar (consider the thermal solar Mojave Desert battle) and other renewable energy sources.
Of course hydropower comes in many forms. Today, I'm most excited about small-scale hydropower plants, but I am keeping a close watch on osmotic power, wave power, and other ways to harness power from water.
1Data was from China Hydroelectric as well as a 2005 report by the National Development and Reform Commission and the China Hydropower Engineering Consulting Group Co.
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Jesse Jenkins is one of the U.S.'s leading energy and climate policy analysts and advocates, managing the Institute's analytical and policy development programs. Jesse is the lead author or co-author of numerous reports and analysis including "Where Good Technologies Come From," "Post-Partisan Power," "Strengthening Clean Energy Competitiveness," "Jumpstarting a Clean Energy Revolution with a National Institutes of Energy," the Breakthrough policy framework, "Make Clean Energy Cheap," and widely cited analysis about Congressional climate change legislation.
Jesse has written for the San Francisco Chronicle, Baltimore Sun, Yale Environment 360, Forbes.com, Grist.org, and HuffingtonPost.com. His research and analysis has been cited by TIME, FORTUNE, Newsweek, Wall Street Journal, Washington Post, Los Angeles Times, Chicago Times, New York Times and other major media outlets. Jesse previously co-directed Breakthrough Generation, the Institute's youth leaders initiative, and prior to joining Breakthrough in June 2008, worked at the Renewable Northwest Project to advance the development of the Pacific Northwest's abundant renewable energy potential. He is founder and chief editor of WattHead - Energy News and Commentary and is a featured writer at theEnergyCollective.com.
By 2050, global energy demand may double or even triple, driven principally by a population surging towards nine billion and the economic aspirations of the world's rapidly developing nations.
That energy supply will meet demand is an economic certainty. Markets balance supply and demand pressures through price, however, so the real question is: at what cost to the global economy, to human welfare, and to the environment?
Supplies of conventional energy sources, already strained as they are, will have trouble keeping pace with soaring demand pressures. If reliant on such sources alone, global energy prices will rise, acting as a drag on economic aspirations worldwide.
More than 125,000 years ago, our ancestors discovered fire. Yet today, over one third of global population meets their basic energy needs in essentially the same manner: by burning dung and wood. If the world remains reliant on ever-more-expensive conventional energy sources, it will put access to energy further out of reach of the world's energy poor, for whom energy is already too expensive.
Then there's the environmental toll. Unchecked demand for fossil fuels will further destabilize the global climate, while feeding our energy needs will send us running to environmentally devastating energy sources like tar sands, shale oil, and mountaintop removal coal mining.
Unfortunately, today's clean energy technologies remain, by and large, too expensive relative to fossil fuels, and their performance too low, to be adopted on the scale necessary to affordably fuel the world while averting these environmental consequences.
Until we have cheaper and more effective clean energy technologies, the world will continue to turn to fossil fuels, energy prices will rise, billions will remain locked in energy poverty, and the planet will continue to warm.
Therein lies the key challenge facing the global community: we must mobilize the shared global investment necessary to accelerate clean energy innovation and make clean energy cheap.